Review of FY 2020 Financial Projections & …...Review of Preliminary FY 2021 Financial Outlook Budget & Finance Committee May 26, 2020 Joseph G. Costello Chief Financial Officer Sherry

Review of Preliminary FY 2021 Financial Outlook

Budget & Finance CommitteeMay 26, 2020

Joseph G. CostelloChief Financial Officer

Sherry FosterInterim AVP, Business Planning & Analysis

FY 2021 Budget and Financial Calendar Planning Process Calendar

Finance Department

Date Subject

May 26 • Review of FY 2020 Financial Projection & Preliminary FY 2021 Financial Outlook

Jun 9 • Review of FY 2020 Financial Projection & Preliminary FY 2021 Financial Outlook

Jun 23 • Review of FY 2020 Financial Projection & Preliminary FY 2021 Financial Outlook

• FY 2021 Budget and Financial Planning Process – Departmental Budget Presentations

Jul 7 • Briefing on FY 2021 Budget and Financial Planning Process - Draft FY 2021 Annual Budget & Twenty-Year Financial Plan

1

FY 2021 Budget and Financial Planning Process Calendar (Cont.)

Finance Department

Date Subject

Aug 11 • Budget & Finance Committee recommends approval to COTW/Board to send FY 2021 Budget and Twenty-Year Financial Plan to Service Area Cities

• Board approves sending FY 2021 Budget and Financial Plan to Service Area Cities

Aug 25 • Budget and Finance Committee recommends approval of the FY 2021 Annual Budget and Twenty-Year Financial Plan

Aug • DART Presentation of Proposed FY 2021 Annual Budget and Twenty-Year Financial Plan to the Service Area cities

Sep 22 • Board Approval of FY 2021 Annual Budget and Twenty-Year Financial Plan

2

• Part 1: FY 2021 Budget & Twenty-Year Financial Plan

• Part 2: FY 2021 Capital Budget Overview

Agenda

Finance Department 3

Part 1: FY 2021 Budget & Twenty-Year Financial Plan

• Situation• Financial Impact• Key Financial Levers• Financial Detail• Capital Projects• Summary

Part 1 Outline

5

Situation

• DART to establish a plan to eliminate financial shortcomings driven by current indicators.

• Finance has modelled potential actions to achieve required spending offsets.

COVID-19 has Impacted Revenues – Requiring Spending Offsets

5

COVID-19 Impact Estimate

6

3 Key Financial Levers to Balance our Budget

Finance Department

Operating Cost• Service level monitoring• Operational efficiency and procedural effectiveness• Personnel right sizing• Financial accountability

Funding/Cash Reserveso Federal and other fundingo Agency reserves

Capital Projects• Project deferment

7

FY2020 FY2021 20 - Yr PlanOperating Cost $12.3 $39.4 $626.4Funding/Cash Reserves* $130.4 ($111.3) $500.0Capital Projects $96.8 $270.6 ($137.6)

Total $239.5 $198.7 $988.8

Summary to Offset Impact (In Millions)

Operating Cost will also include a more aggressive scenario in detail* Funding/Cash Reserves includes a Federal Grant included in FY2020 as a place holder

• Operating Cost adjustments will have a long-term positive effect

8

Operating Cost

Operating Cost (in Millions)

• Planned scenario accounts for;o Hiring freezeo Merit eliminationo Bonus eliminationo Non-Service

related cost constraints

FY 2020 FY2021Personnel

Hourly Open $1.5 $2.8Salaried Open $3.5 $6.9

Merit elimination $8.0Bonus elimination $0.6 $2.5Total Personnel $5.6 $20.2

Non-PersonnelConsulting $2.0 $1.5Outside Training $1.2 $1.0Travel $0.7 $0.6Inflation $10.3Other $2.8 $5.9Non-personnel Reductions $6.7 $19.3

Total Reductions $12.3 $39.4

10

Sales Tax Analysis

$400

$500

$600

$700

$800

$900

$1,000

$1,100

$1,200

$1,300

$1,400

FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31 FY32 FY33 FY34 FY35 FY36 FY37 FY38 FY39

Sales Tax Receipts in (Millions)

As Approved 25%Lose

#REF! 50%Lose

55%Lose

Series6

Potential Checkpoints• Data will be monitored monthly. Checkpoints below

represent potential action decisions.Action Criteria Timing

Assess revenue trendsa) Sales taxb) Passenger revenuec) Total

10% variance from projections December 2020

Assess cost trends 5% variance from budget December 2020

Access ridership trendsa) Passenger loadsb) Total by mode

Social distancing tolerances 10% variance from projections

OngoingDecember 2020

12

Funding/Cash Reserves

Finance Department

FY 2020 FY 2021 20 - Year PlanFinancing

Borrowing ($100.0) ($120.0) ($211.0)Debt Service $0.8 $8.7 $414.7

Reserves $0.0 $0.0 $66.7

Federal Relief $229.6 $0.0 $229.6

Total $130.4 ($111.3) $500.0

Funding Impact ($ Millions)

Funding/Cash Reserves Impact

• The Federal Relief has been placed in FY2020• Secure maximum federal and other funding• Working cash reserve – the lower sales tax projection results in a lower

working cash requirement

14

Capital Projects

Finance Department

FY2020 FY2021 20 - Year PlanD2 79.2$ 250.3$ (150.6)$ Streetcar Extension 0.6$ 8.5$ (18.3)$ Other Capital Projects 17.0$ 11.9$ 31.3$ Total 96.8$ 270.7$ (137.6)$

Capital Projects Cash Flow ($ Millions)

Capital Projects

• Capital project deferrals can help short term cash flows, but increase project cost due to inflation

• Management to scrutinize the capital project list

16

Summary and Next Steps

Order of Magnitude Summary

Finance Department

In millions FY 2020 FY 2021 20-year Impact

Sales tax ($157.7) ($182.8) ($1,309.9)Passenger revenues (24.5) (22.0) (46.5)Increased operating costs (8.6) 0.0 (8.6)

Total financial impact ($190.8) ($204.8) ($1,365.0)Operating cost savings $12.3 $39.4 $626.4Capital project deletions 17.0 11.9 31.3Streetcar central link deferral 0.6 8.5 (18.3)D2 deferral 79.2 250.3 (150.6)Long-Term Debt Issued (100.0) (120.0) (211.0)D2 Grant 0.0 0.0 350.0Reserve Adjustment 0.0 0.0 66.7Debt service changes 0.8 8.7 414.7Fed relief 229.6 0.0 229.6Other Misc. 0.2 (0.0) 5.5

Total offset $239.7 $198.7 $1,344.3 Net change $48.9 ($6.1) ($20.8)

18

Next Steps

Action Items TimingService Planning Calculate operating workforce necessary at selected

service levels. June 2020 – Assess current and expected ridership levels for service effective October 2020. December 2020 – Revisit ridership levels to assess changes.

Workforce Strategy Determine headcount targets by Organizational Unit. June 2020 taking into account Service Planning.

Retirement Incentive Program

Identify vacant positions to be eliminated from the budget. Determine Retirement Incentive Program target to achieve target reduction. Choose program designed to achieve target reduction. June 2020.

• Based on Finance-identified target reduction in budgeted headcount of 300:

19

CARES Act Funding

• On March 27, President Trump signed the CARES Act into law.

• FTA allocated $25B to grantees receiving formula funds.

• The Dallas Area Urbanized Area (UZA) was allocated $318,629,129. • DART’s allocation was $229,627,520.

• DART is working with FTA to file our grant application for operating expense reimbursement beginning on January 20, 2020.

20

Finance Department21

Part 2: FY 2021 Capital Budget Overview

• Capital Budgeting Process

• FY 2020 Financial Plan Capital Program

• Capital Projects Saving/Deferral

• FY 2021 New Requests and Program Changes

• Program Highlights

Part 2 Outline

23

Capital Budgeting Process -Timeline

Finance Department

• Determine Capital Needs

• Develop Capital Budget

• Execute Capital Program

24

Capital Budgeting Process –Sources for Expenditures

Finance Department

• System Expansion and Acquisition Fund

(SEA) – Bond program

• External Local and Federal Funds

• General Fund – primarily sales tax

25

Capital Budgeting Authority

Finance Department

• New projects are incorporated during the Budget process into the Financial Plan

• Financial Standard G9 requires a Financial Plan Amendment for a new project over $1,000,000

• Board approves project related contracts based on thresholds

26

Capital Program Components

Finance Department

• Individual Capital Projects

• State of Good Repair (SGR)

27

FY 2020 Financial Plan Capital Program

20-Year SGR Reserve by Asset Type

Finance Department

Guideway, 9.1%

Passenger Stations, 4.9%

Administrative Building, 2.3%

Maintenance Building, 9.6%

Revenue Vehicles, 57.8%

Service Vehicles (non-revenue), 2.2%

Fare Revenue Collection

Equipment, 2.4%

Communication/ Information Systems, 11.6%

29

FY20 FP 20-Year Expansion / Enhancement – Core Capacity (in $000s)

Finance Department

Description 20-Year Total

Second Downtown Rail Line (D2) $1,400,385

Red & Blue Line Platform Extensions 96,224

Dallas Central Streetcar Link 95,994

Total Core Capacity $1,592,603

30

FY20 FP 20-Year Expansion / Enhancement – Commuter Rail (in $000s)

Finance Department


Cotton Belt Construction $1,136,795

Positive Train Control 6,000

Total Commuter Rail $1,142,795

31

FY20 FP 20-Year Expansion / Enhancement – Light Rail/Streetcar(in $000s)

Finance Department

Description 20 Year Total

Loop 12 Station $12,000

Hidden Ridge Station 10,800

Streetcar Project 7,000

Total Light Rail/Streetcar $29,800

32

FY20 FP 20-Year Expansion / Enhancement – Rolling Stock (in $000s)

Finance Department


Three Buses for UTD Service Expansion $1,791

Locomotive Purchase 4,982

LED Destination 3,403

Total Revenue Vehicles $10,176

33

FY20 FP 20-Year Expansion / Enhancement – Passenger Facilities (in $000s)


Description 20 Year Total

On Street Passenger Facilities $7,044

Transit Signal Priority 2,900

NW Plano Park & Ride 1,000

Total Passenger Facility $10,944

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

$1,000

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39

Historical Expansion/New Other SGR

Capital Spending by Year (in $M)


FY20 FP 20-Year DART Capital –Spending by Mode

Finance Department

LRT43% Paratransit

0%General Maint. /

Road Improvement1%

Streetcar1%

CR26%

Capital P&D5%

Bus 17%

Agency-Wide7%

36

FY20 FP 20-Year DART Capital Program – Funding

Finance Department

DART85.0%

Federal & State10.9%

Streetcar0.1%

Trinity Metro2.9% Other External

1.0%

37

The Goal of Reviewing Active Capital Programs

Finance Department

I. Identify, fund, and timely implement critical projects.

II. Defer and rescope the remaining projects to ensure we can accomplish our Mission.

38

FY20 FP 20-Year DART Capital Program – Saving Criteria

Finance Department

I. Mission Critical – Can’t be deferred or scaled down.

II. Scale Down – We still accomplish the project’s key goals with a ‘bronze’ version.

III. Defer - Defer project can be requested in future years.

IV. Cancel – Not mission critical can be deleted in order to preserve cashflow for operation.

39

FY20 FP 20-Year DART Capital Program – Saving (in M)


Department Approved Budget

Saving Saving %

Engineering $43,473.6 $3,550.0 8%

Police $2,722.5 $0.0 0%

Rail Operations $128,430.4 $11,816.2 9%

Bus Operations $41,344.4 $572.7 1%

Technology $39,520.2 $550.0 1%

MarComm $1,470.0 $0.0 0%

Planning & Development $59,227.7 $6,978.4 12%

Rail Program Development $220,378.9 $9,793.9 4%

Commuter Rail $114,445.0 $1,271.2 1%

Operations $651,012.7 $34,532.4 5%

FY 2021 New Capital Requests and Program

Changes

• Under review for viability and priority

• Some of the projects shown may not be included in the final proposed FY21 Budget

• All projects recommended by management will be in the FY21 Draft Financial Plan in July

FY21 Proposed New Projects

42

New Capital Requests by Mode(in $000)

Finance Department

# Description

Total Requested

Budget

Funded from Existing

ReservesExternal Funding

Net New DART

Capital

Agency-Wide1 Network Upgrade Phase II & III $6,500 $700 $5,800

2 455- EPM Improvements $3,500 $1,000 $2,500

3 461- VOIP Upgrade $2,500 $2,500 $0

4 461- Desktop and Laptop Replacement $1,980 $400 $1,580

5 NRV Replacements FY21 $1,835 $1,835 $0

6 462- Infrastructure Expansions/Replacement $1,500 $350 $1,150

7 458- INIT VBS Copilotpc upgrade with 4G LTE in LRV and SC $1,440 $1,440 $0

8 453- BI Enterprise Applications $560 $560 $0

9 461- Enterprise Monitoring Tools $250 $250 $0

10 453- Oracle partitioning licenses for ODA databases $80 $80 $0

11 453- Enterprise license for SQL server to build SQL server farm $50 $50 $0

Total Agency-Wide $20,195 $9,165 $0 $11,030

43

New Capital Requests by Mode(in $000) (continued)

Finance Department

# Description

Total Requested

Budget



Net New DART

Capital

Bus 12 4127 Elm St. Heater Replacement $749 $749

13 East Dallas Bus Washer Rehab $705 $705 $0

14 SOCBOF ROOF TOP HEATERS $240 $240

15 ED Parking Garage Lighting and Safety Improvements $230 $230

16 SOC BUS EXHAUST REHAB $162 $162 $0

17 SOCBOF PAVEMENT REPAIR $137 $137 $0

18 ED Ready Room Remodel $116 $116 $0

19 SOCBOF Maintenance Bldg Break-room/Restroom Rehab $93 $93 $0

20 E.D. Facilities Power Washing $23 $23 $0

21 4209 Main Dock Lift $16 $16 $0

Total Bus $2,471 $1,253 $0 $1,219

44


Finance Department

# Description

Total Requested

Budget



Net New DART

Capital

LRT22 TES Traction D/C Breaker Retrofit (SS) $3,646 $3,646 $0

23 Pantograph Inspection Machine $760 $760 $0

24 PA Rail Facilities Concrete Replacement $338 $338 $0

25 PA Bus Facilities Concrete Replacement $225 $225 $0

26 PA Bus Transit Center Rehab (SGR) Downtown Garland $225 $225 $0

27 PA Bus Transit Center Rehab (SGR) North Irving $225 $225 $0

28 PA LRT at Grade Platform Rehab (SGR) SWMC/Parkland $113 $113 $0

29 PA LRT Commuter Rail Station Rehab (SGR) Victory Sta $84 $84 $0

30 COMMS Aeroflex Portable Service Monitors $46 $46 $0

31 COMMS Replace Rubidium Frequency Standard $14 $14 $0

Total LRT $5,675 $5,675 $0 $0

45


Finance Department

# Description

Total Requested

Budget



Net New DART

Capital

Commuter Rail32 Inwood and Knights Branch Design for Double Track $770 $770 $0

33 FY21 DFW Bridge Panel Replacement $364 $182 $182 $0

34 Upgrade to TRE Vehicle Wash Rack at the EMF $300 $150 $150 $0

35 FY21 DFW Turnout Replacement $65 $33 $33 $0

Total Commuter Rail $1,499 $1,135 $365 $0

Non-Operating36 FY21 Capital Planning $2,000 $1,000 $1,000

37 Automated Bus Consortium Procurement - Phase 2A $100 $100 $0

Total Non-Operating $2,100 $1,000 $0 $1,100

Grand Total $31,941 $18,227 $365 $13,349

46

• Capital planning and approval processes follow Board approved Financial Standards

• Annual review of SGR reserves ensures that DART can maintain its system in the future

Summary / Key Points

47

Appendix

Financial Plan Priorities

Finance Department

• The Financial Plan demonstrates the financial sustainability of the agency with the following priorities. SGR: Preserve the capital assets of the agency (state-of-

good-repair). Workforce: Retain agency institutional knowledge and

expertise. Service: Provide the highest levels of effective mobility

service.

49

Financial Plan Priorities (continued)

Finance Department

• The potential budget and financial plan actions, below, preserve the financial sustainability of the agency within these priorities as follows:Action (priority)o Secure maximum federal and other funding. (All)o Draw on agency reserves. (All)o Defer projects other than state-of-good-repair projects.

(SGR)

50

Financial Plan Priorities (continued)

Finance Department

• Retain employees required to provide service. (Service)• Achieve operating budget savings through non-personnel

cost reductions, program deferrals, and personnel related cost constraints. (Workforce)

• Review SGR projects for effectiveness. (All)• Modify service levels as appropriate for existing demand.

(All) • Examine personnel and procedures for efficiencies and take

actions necessary to enact. (All)

51

Documents

Review of FY 2020 Financial Projections & …...Review of Preliminary FY 2021 Financial Outlook Budget & Finance Committee May 26, 2020 Joseph G. Costello Chief Financial Officer Sherry